John Deere considers using overseas plants and US strikebreakers

By Chris Isidore, CNN Business

John Deere says it is looking at all options to provide products to its customers, including possibly using strikebreakers or importing equipment from overseas factories it operates.

More than 10,000 members of the United Auto Workers union remain on strike at 12 Midwest factories and facilities of the farm and construction equipment company. In a vote concluded Tuesday a majority of members rejected a tentative deal that would have ended the walkout.

The company will now work on what it refers to as its “customer service continuation plan,” said Marc Howze, its chief administrative officer in an interview with CNN Business. As part of that, the company is looking whether it can use the 59 factories it operates outside the United States to help during the strike. Asked if Deere is looking at importing products from those factories to fill US orders, he responded, “That’s something we’re exploring.”

“We’ve made commitments to our customers,” he said. “We want to live up to those commitments.”

Howze also mentioned that management employees have been working nearly around the clock at its US factories that are being struck. Asked if the company is looking at either hiring replacement hourly workers or trying to convince some strikers to cross picket lines to return to work, he responded, “All options are on the table as to what to do as we progress.”

The union reported that 45% of members voted in favor of the most recent tentative agreement between union negotiators and management. While that was not enough to end the strike and get workers back on the job, it was an improvement from the 90% who voted against an earlier tentative agreement in a vote completed just before the strike.

Using replacement workers or strikebreakers is a long-time management technique to try to counteract strikes. But employers across the nation are having trouble finding the workers they want to fill existing job openings, let alone finding workers willing to cross picket lines in the middle of a labor dispute.

Importing goods built overseas is another way that companies have tried to limit labor costs. But this is a difficult time to try to do so, with extensive supply chain problems, especially delays in container ships being able to call on US ports.

Howze said the company’s first choice is to get a deal that UAW members will ratify.

“Fundamentally we’re on the same team,” he said. “We’ve been here for 184 years. We want to be able to continue to employ people in this region for another 184 years. Our [US] employment is up 20% since 1997.”

But he said that Deere cannot raise the economic terms of its offer any higher. The recently rejected tentative agreement included an immediate 10% raise, two other 5% raises later in the 6-year contract, an $8,500 signing bonus and three additional lump-sum payments each equal to 3% of their annual pay. The deal also would have returned cost of living adjustments which would have raised salaries even further to adjust for inflation. Such clauses used to be common in labor deals but have become less common in recent decades.

“We’ve exhausted all of our economic options,” Howze said. “There’s just no more to give. There’s nothing to be gained by our employees continuing to stay out. We’re still talking to the union to try to figure out how to get our employees back to work. But we have nothing more we can give economically.”

The union’s negotiating committee which agreed to the rejected tentative agreement is meeting to “decide its next step,” said UAW spokesperson Brian Rothenberg.

“We appreciate all the support that the communities are giving to our striking members,” he said.

Deere has recently made record profits, but that doesn’t mean it can agree to everything that some rank and file want in a contract, Howze said.

“We’re a cyclical business,” he said. “Things may be great right now, but we need to be profitable and competitive with other companies that have long since moved away.”

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